import substitution

Import Substitution

GROUP MEMBERS

Jay Rathod 61Surinder Kaur Saini 62Tanvi Sangani 64Shobid Sawant 65Akshaye Shah 67

IntroductionImport - To bring goods or other things in one country from another

Substitute - A thing used in place of another

Import Substitution - means replacement of goods and services for one an other

Import Substitution is defined as ‘An attempt by a country to reduce imports (and hence foreign exchange expenditure) by encouraging the development of domestic industries regardless of inefficiencies’

Import Problems

Procedure for clearing imported goods is very difficult and time-consuming.

Renewal of license is based on the previous years consumption and imported quantity is about one years’ requirement

Crude oil prices

Essential unavoidable items have to be imported on any circumstances

Other Import Problems Infrastructure problems viz. port facilities, cargo

handling, etc. Different commercial practices and commodity

specifications Problem of different technical representation in

foreign countries To provide on-site facilities for inspection in

foreign countries Limited foreign exchange resources to settle

external bills Lack of experience and technical skills

Role of Purchase Executive

Import Substitution and R & D

How is Import Substitution Practiced

Information Sharing and Networking - Matching local producers with local suppliers

Buy Local Programs- Encouraging firms and consumers to purchase local products rather than imported

Industry Targeting- Attracting firms and business that will engage in or import substitution

Procedure for Import Substitution

Information Sharing and Networking

Actions • Identify imported inputs• Search for same inputs locally• Link suppliers and buyers

Advantages• Takes existing opportunities• Cost savings for local suppliers• Flexibility of supply chain• Engages local businesses


Problems • Harder to do for services • Firms prefer current suppliers• Programs need visibility, effective marketing

Examples • Oregon marketplace• Washington marketplace• Industrial supplies office


Buy Local Voluntary campaigns Problems

• Works better with tourism and consumer goods• Large purchases are more cost-conscious• Sizeable firms and branch plants are less tied to local

area

Examples• Made in USA• Australian tourism bureau

Procedure for Import substitutionIndustry Targeting

Actions • Analyses opportunities, expert opinion • Provides information to entrepreneurs• Encourages import substitution

Advantages • Thorough procedure• Engages local entrepreneurs • Generates useful information for others


Problems• Needs supply of capital and willing

entrepreneurs• Negative aspects of industry and location

incentives• Slow, laborious process

Examples • Centre for economic development university

of Alaska at Anchorage• British Columbia Business Service Centre

Examples of Import Substitution

Information Sharing And Networking

Oregon Marketplace – Key Features Oldest state program in US, began in 1986 $3.5 million in import substitution created 1987-

1990

Washington Marketplace – Key Features Run by local and regional economic development

organizations $3.7 million in import substitution created 1987-

1990


Buy Local Campaign

Made in USA- Key Features Encourages American supplying and consumption Involved with policy creation and economic

lobbying

Australian Tourism Bureau – Key Features Policy oriented approach Enhances international and domestic

competitiveness of Australia’s tourism industry


Industry Targeting

U. Of Alaska Centre of Economic Development –

Key Features

Analyses opportunities in Alaska Relays information to state govt. and

entrepreneurs

British Columbia Business Service Centre – Key Features

Provides various information on economic development and opportunities

Import Substitution Problems

Non-availability of drawings and detailed technical specifications

High quality materials are not available locally Due to lack of technical know-how the goods

produced is not as good as the imported one, despite of high price

The quantity required is too small Power cuts, informal voltage fluctuations etc. delay

the delivery of goods Natural calamities like flood, earthquake etc High lead time Profit margin of 100% Bad after sales services Foreign collaborators look after their own interest

Conclusion

Thank You

import substitution

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